Top US banking regulator, the Office of the Comptroller of the Currency, has approved the use of stablecoins for the settlement of financial transactions by banks.
The OCC guidance clears the way for banks to participate in independent node verification networks (INVN) and use stablecoins to conduct payment activities and other bank-permissible functions.
Acting Comptroller of the Currency Brian P. Brooks, says: “The President’s Working Group on Financial Markets recently articulated a strong framework for ushering in an era of stablecoin-based financial infrastructure, identifying important risks while allowing those risks to be managed in a technology-agnostic way. Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin payments on behalf of customers who are increasingly demanding the speed, efficiency, interoperability, and low cost associated with these products.”
The agency letter concludes a national bank or federal savings association may validate, store, and record payments transactions by serving as a node on an INVN. Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities.
While the OCC's approval added to the surge of investor interest in cryptocurrency, the guidance does not cover decentralised assets like bitcoin. Rather, the lifting of perceived restrictions is linked to regulatory-approved bank-issued coins and central bank digitial currencies.
In a Twitter thread, Ciricle co-founder Jeremy Allaire hailed the OCC's letter as a huge win for the cryptocurrency industry. An alternative take comes from Anglea Walch, a professor at Mary’s University School of Law in San Antonio, Texas and research associate at UCL Centre for Blockchain Technologies